AppNexus Raises Another $60 Million

Ad technology company AppNexus has accepted a $60 million investment from a Boston-based public equity and asset management firm, it announced Monday.

The company has raised a total of $200 million to date, and said the latest funding round values it at $1.2 billion. AppNexus is also in discussions to raise up to an additional $40 million from additional investors, it said.

According to CEO Brian O’Kelley, AppNexus did not necessarily require further investment, having raised $75 million in January 2013. The company continued to receive interest from a range of potential investors, however, and decided it was “a good time” to raise additional capital anyway.

“Now we have the money and the scaled business to go and make the impact on the industry we really want,” Mr. O’Kelley said. “We can go out acquire companies; we can hire people, but the truth is we can now be more impactful and bold about changing how this industry works,” he added.

The additional funding also means AppNexus is under less pressure to raise capital through the public markets. In the past two years a handful of online advertising companies have held initial public offerings of their own, but have subsequently performed poorly. Programmatic ad network Rocket Fuel has seen its stock price dip 73% since January, for example. YuMe is off 38%; Tremor Video, 46%; and Millennial Media, 66%. Rubicon Project is down 27% from its $15 initial-public-offering price in April. (WSJ owner News Corp has a 13.7% stake in Rubicon).

Mr. O’Kelley said AppNexus is no rush to follow in their footsteps with an IPO of its own. “It’s possible next year,” he said, but added that he sees little incentive to go public other than liquidity for investors and employees.

“I suspect we will go the IPO direction, but I’d like to do it when it’s right for us and when it’s right for the market,” he said.

According to Mr. O’Kelley some public investors have been “burned” by some of the online advertising IPOs of the past two years, in part because investors don’t fully understand the companies they’re investing in, or the broader online ad market. As a result, he wants AppNexus to go public when investors understand more about what it does and where it fits into the complicated online ad ecosystem.

“Companies have gone public saying they’re ad technology companies, and then it’s become clear they’re actually high-growth, high-margin ad networks, and investors feel their expectations haven’t been met,” he argued.

Mr. O’Kelley suggested some private investors have pushed for IPOs simply to enable them to recoup their investments.

“I think there are private companies whose investors come to board meetings and want to push for an outcome while the market is hot, but our investors want us to really have the most impact we can,” he said.

Separately, Mr. O’Kelley pointed to AppNexus’s most recent funding as evidence that successful technology companies can be built in New York as opposed to California.

“I’m really tired of people saying you can’t build a real technology company in New York,” he concluded. “We’ve proved that you can.”

AppNexus said it’s also in discussions to secure an additional $40 million from further invest

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